Payroll providers zero in on compliance
Global payroll leaders are increasingly focusing on enhancing compliance, bolstering data security and privacy in response to the evolving nature of cyber threats. This attitude is essential as organisations strive for continuous improvement in their security measures and compliance strategies to address emerging threats and vulnerabilities.
The findings, from a new research report – ‘Reaping the Benefits of Unified Pay Solutions’ – revealed that 84% of global payroll leaders are prioritising boosting their compliance, data security, and privacy in 2024, second only to the central function of ensuring accurate and timely payroll processing.
With widespread reports of firms facing cyber-attacks this year, and as the World Economic Forum warns of a 50% increase in data breaches last year, the report suggests that more resources are being channelled into tackling this issue. While technological systems may be a primary focus for security concerns, the sensitive nature of the information that payroll teams handle makes global data protection and security of increasingly critical importance.
“While compliance has long been a key element of payroll, the evolving nature of data breaches and cyberattacks is clearly putting greater pressure on experts to safeguard their systems against new threats on a global basis,” says Matt Hillier, EVP Product at CloudPay.
“Payroll practitioners deal with some of the most sensitive data that businesses hold, and in the era of diverse regulations governing payrolls across different regions and jurisdictions, and growing cyber threats, objectives have expanded to include ensuring compliance and maintaining data security.”
“However, it’s important to add that payroll teams should also ensure that the growing focus on data security and the ensuing complex administrative burden does not distract them from their core tasks or lessen some of the strategic focus. This time drain can restrict a team’s ability to tackle more strategic tasks, which is where a unified pay solution can help.”
The research drew insights from a survey involving over 100 senior leaders in payroll, finance, and HR to understand the complexities of global payroll operations and highlight the significance of unified pay solutions in today’s dynamic work environment.
The report also shows the movement towards integrating payroll systems into unified pay solutions that not only enhance compliance and data security but also significantly improve operational efficiency and the employee pay experience. The report outlines that unified pay solutions consolidate payroll, payments, and on-demand pay (EWA—Earned Wage Access), which offers several strategic advantages.
Firstly, unified pay solutions bring about heightened global visibility and strategic reporting capabilities for organisations. This global oversight is crucial for companies that operate across various jurisdictions with complex regulatory requirements. Such integration helps in navigating the varied and often stringent compliance landscapes effectively, reducing risks associated with non-compliance.
Secondly, from an employee perspective, these solutions elevate the pay experience by providing real-time access to earned wages, thereby supporting financial well-being and flexibility. This is increasingly important as the workforce today values immediate access to their earnings, reflecting a shift towards a more agile and responsive payroll system that aligns with modern financial management preferences.
Additionally, the implementation of unified pay solutions can lead to significant cost reductions. By automating and integrating payroll processes, companies can minimise manual interventions, which often lead to errors and increased administrative overheads. The streamlined processes not only save time but also reduce costs associated with payroll management.
Moreover, the integration of payroll with other HR functions through unified solutions can help in drawing actionable insights from payroll data which can inform broader business strategies. This capability transforms payroll from a back-office administrative function to a strategic component of the business, providing valuable data that can influence decision-making at higher levels of the organisation.
Although still in the early stages of adoption, the feedback from early adopters of unified pay solutions is overwhelmingly positive. Respondents report benefits such as lower administrative costs, improved efficiency, and better compliance. Notably, about 33% of survey participants are already experiencing these benefits, indicating a strong validation of the concept and execution of unified pay solutions.
A significant shift towards outsourcing payroll and payment processes is noted in the report. Around 74% of respondents mentioned outsourcing employee payments, which is only second to payroll calculations. This trend underscores the growing complexity of managing payroll across different regions and the need for specialized expertise in navigating diverse regulatory environments.
The report reveals that 45% of leaders lack global visibility into their payroll operations, which significantly hinders strategic decision-making. The importance of payroll in strategic planning is often underestimated, yet it plays a crucial role in shaping employees’ perceptions and overall organizational culture.
By enhancing visibility, unified pay solutions not only improve compliance and operational efficiency but also elevate the strategic role of payroll within the organization.
The data underscores that a positive payroll experience is crucial for boosting employee morale and loyalty. More than 90% of survey respondents acknowledged the significant impact of payroll on the employee experience.
Unified pay solutions, by streamlining payroll processes and offering flexible pay options like EWA, address these needs directly, thereby enhancing overall employee satisfaction.
The integration of advanced technologies such as AI, machine learning, and real-time data analytics with payroll systems is another key finding.
These technologies are not just enhancing the accuracy and timeliness of payroll processes but are also enabling businesses to derive strategic insights from payroll data, which can be pivotal in driving business decisions.
The report also delves into the common pain points experienced by organizations, such as high error rates due to manual processes, complex regulations across different countries, and the heavy administrative burden on payroll teams. Unified pay solutions help in addressing these issues by automating many of the repetitive tasks and standardising processes across different regions, thereby reducing the scope for errors and non-compliance.